Trump threatens French wine in retaliation for Gafa tax

Donald Trump stepped on Friday against France and its tax on the US digital giants denouncing “stupidity” of President Emmanuel Macron and threatening to retaliate the French wine, one of the most iconic tricolor export products. “France has just imposed a digital tax on our big US technology companies.If someone had to tax them, it should be their home country, the United States,” tweeted the US president.

Trump calls Macron “stupid”

“We will soon announce a substantial interaction after Macron's stupidity, and I have always said that American wine is better than French wine!” Added the White House host, who does not drink alcohol. “I've always preferred American wines to French wines even though I do not drink wine, I like their appearance, American wines are great,” the Republican billionaire from the Oval Office said Friday.

The White House announced in the evening that MM. Trump and Macron spoke by phone during the day, adding that they had mentioned the French tax on the digital giants, but without specifying whether French wines were on the menu of discussions between the two leaders. The Elysee said on Saturday that Emmanuel Macron insisted during this interview that Gafa taxation was “a subject of common interest” and not only French, “on which we must continue to act with a view to obtaining a broad international agreement “.

The G7 summit in Biarritz (south-eastern France) from 24 to 26 August, will be “an important opportunity to advance” on this issue, added the presidency, stating that the interview also focused on 'Iran. A little earlier, the Minister of Economy Bruno Le Maire had said that “France will implement (it) its national decisions”.

The French Parliament had definitively adopted on 11 July the introduction of a tax on the digital giants, making France a pioneer country in the taxation of “Gafa” (acronym for Google, Amazon, Facebook and Apple) and other multinationals accused of tax evasion. The Trump administration had announced the day before that decision that it was launching a survey to measure the effects of such a tax on US companies.

Then, at the G7 in France two weeks ago, Paris and Washington seemed to reduce their litigation, finance ministers then talking about progress towards a global agreement on the taxation of digital. “The universal taxation of digital activities is a challenge that concerns us all.We want to reach an agreement on this subject in the framework of the G7 and the OECD,” said Friday Bruno Le Maire.

“Political tools”

This unilateral decision “demonstrates the lack of commitment of France in the ongoing negotiations with the OECD,” however said Friday from Washington a White House spokesman, Judd Deere. “The Trump administration has always said it will not sit back and tolerate any discrimination against US companies,” he warned in a statement.

The US Trade Representative (USTR) has already launched an investigation into the possible effects of this tax, he said. And, the Trump administration “looks closely at all the other policy tools,” he said. The Gafa tax creates a tax on large companies in the sector not on their profit, often consolidated in countries with very low taxes like Ireland, but on turnover, pending a harmonization of rules at the level of OECD.

Earlier, the White House's chief economic advisor, Larry Kudlow, called the tax “a very, very big mistake.” “We are not happy that France has gone ahead with this kind of tax on digital,” he said on the CNBC channel.

The Gafa tax imposes these companies up to 3% of the turnover achieved in France including targeted online advertising, the sale of data for advertising purposes and the linking of Internet users by the platforms. This solution is intended to be only temporary pending the outcome of international negotiations.

In June, Donald Trump had already hinted that he could impose additional customs duties on French wine. But he then invoked these additional customs duties to correct a competition deemed “unfair”. “France taxes wine a lot and we tax little French wine,” had then denounced the US president during a long interview on CNBC.

French wine is renowned for being “very good”, had also commented the host of the White House. But American winemakers complain that he enters the US “for nothing”. “It's not fair, we're going to do something about it,” he said.

France reacts, and wants an agreement

France wants to reach an agreement with the United States by the end of August G7 on the taxation of digital giants, said Saturday the Minister of Economy, Bruno Mayor. The minister reacted to Donald Trump's attacks on Friday against the French tax on digital giants recently voted. “We want to work closely with our American friends to universal taxation of digital activities,” said the Mayor at a press point in Bercy. “We wish between now and the end of August – the G7 Biarritz of heads of state – to reach an agreement on this universal taxation of digital activities,” he added.

To this end, the Mayor will meet at 17:00 with his US counterpart, Secretary of the Treasury Steven Mnuchin, to advance to an agreement. He recalled that the goal was to reach agreement at the level of OECD countries by the end of 2020.

The minister also pointed out that the French tax on digital giants, often called the Gafa tax, would not only affect US companies. “There is no desire to specifically target US companies,” said the minister. “American, European or Chinese multinationals have a digital activity, sometimes without physical presence in a territory, and pay little or no tax,” he said. “This situation is not acceptable and it is our collective interest to achieve a fair taxation of digital activities in the world,” he said.

The French digital tax imposes companies up to 3% of turnover in France including targeted online advertising, the sale of data for advertising purposes and the linking of users by the platforms

(With AFP)

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